Is This a Quality Company?
From Lynn Ostrem, Crow River Investment Club

1st        Does this company meet our basic criteria?

There's no sense in spending a lot of time on a company that does not meet our most basic BI criteria.  Complete a Stock Selection Guide (SSG).  We are looking for the following:

§         Straight, upward graph lines;

§         Double-digit historical sales & earnings;

§         Most recent 4 quarters growing at or better than the 10-year average;

§         Reasonable debt (BI says < 33% of total capital);

§         Reasonable insider ownership; and

§         Steady or climbing Pre-Tax Profit as a % of Sales (2A).

2nd       Is this a Quality Company?

See if you can answer the following questions—not each one specifically, but as a whole.  Try to get a “feel” for the company’s character and future prospects.

Excellent Business Model:

§         Does the company have a monopoly-type business that makes it difficult for competitors to enter?

§         Does it have an instantly recognizable product or service?

§         Is the product or service so superior over its competitors that it commands buyer loyalty?

§         Does the company make products that wear out fast or are used up quickly?

§         If the products are not purchased frequently does the public use them on a daily basis?

§         Can the company raise its prices to stay ahead of inflation without incurring a decline in demand?

§         Does the business have a repetitive consumer service that people are constantly in need of, where non-union workers with little or no skills can perform the services?

§         Do I understand how the company makes its money?

§         Is it in the business of making products that do not require that it spend heavily on sophisticated plants and on-going capital improvements?

Expanding Possibilities:

§         Where does this company rank among its competitors? 

§         Is it in the top 1st or 2nd position in its industry, by sales? 

§         What is the outlook for its industry? 

§         Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?  

§         Is worldwide expansion believable for their products?

3rd     Finding Good Companies

Look around your house.  Buy what you know!
This is easy!  Look on the cans and boxes in your pantry, under your kitchen and bathroom sink and in the laundry room.  Look on the labels of your linens, clothes and furniture.  What kind of computer do you own?  Printer?  Where do you buy your paper and toner cartridges?  What kind of car do you drive?  Who’s your insurance carrier?  Which are your favorite restaurants, discount or drug stores? Clothing stores? Where do you or your neighbors buy their children’s clothes and toys?  Start becoming aware of these things.

Read local or national newspapers.
The local newspapers have business sections.  If you get the paper, start perusing this section for interesting stories.  Barnes & Noble, Borders Books and other book stores also carry local business publications.  The good national papers are Business Investors’ Daily, USA Today, and the Wall Street Journal.  If you plan to take a trip, stop in at a local book store and pick up a couple of these publications.  Or read them at your library.

Read financial magazines.
They come in every conceivable flavor!  You can find them at any magazine stand (including the grocery store line) and many of them also reside online.  It’s recommended that you choose one or two and subscribe.  Just be aware that each stock has a story…a good one!…or it typically isn’t highlighted in a magazine.  Any good story is only a “hot tip” until you’ve done your research!

§         Money Magazine

§         Smart Money Magazine

§         Fortune Magazine

§         Forbes Magazine

§         Worth Magazine

§         Kiplinger’s Personal Finance Magazine, also at

Also, you can go to, click on News, then search for your company's hometown paper.  Or, you can go to to find company and industry research publications!

Read daily news on the internet.
This is an enjoyable process!  There are many daily news sources—obviously, many cover the same information.  But it’s worth taking a little time each day to learn something new.

§         The Motley Fool at   Click on Today’s Headlines. 

§         Morningstar, Inc. at

§         MSN at 

§         Investor Place at  Check out Today's Features

§         CBS MarketWatch at

§         Net Stock Direct at Covers DRIPS and Direct stocks

Peruse the Value Line Investment Survey at the library...
Value Line is the granddaddy of investment analysis.  The standard edition contains 1,700 stocks.  The expanded edition has another 1,800 stocks.  Each Friday, a new section is released, covering several industries.  There are 13 in all.  Then they start all over again.  Each section comes out 4 times per year. 

…and the S&P Reports and the Outlook.
S&P reports are similar to the Value Line report.  Most online brokers provide access for free.  If not, you can get them at the library.

The Outlook is a wonderful source of stock ideas.  Each week, a report comes out, loaded with ideas.  This book is typically available in the larger libraries. 

Use BI, Bivio, Manifest Investing, IClub and other related websites; check what other clubs are buying.
BI has a constant flow of good stock ideas!  Their website is at  There you will find the following:

Monthly Featured Stocks – Stock to study, Undervalued, etc.
Investor’s School – These are the transcripts of recent stock study classes.
BI Top 100 Stocks – A list of the most popular investment club stocks.
I-Club-List – A message board where BI club members discuss their stocks.
BI Forum – Another BI website that houses stock studies and message boards.

Bivio is located at
Manifest Investing has a free trial and plenty of education
IClub has the software to help you select good stocks

4th     Where to do your Research?

Company’s Website:
The company website address can be found in the Business Section of Value Line. You can also find the company website online by entering the ticker symbol at most financial websites and finding the Company Snapshot or Profile. Oftentimes, you can “guess” the website address, i.e. Pfizer is and Home Depot is 

The company website has a wealth of information on the company’s history, its employees, products, locations and financial statements.  You can also find recent press releases and other interesting information. 

Annual Reports
The SEC requires all public companies to produce an annual report.  These booklets will explain the company’s products, services, market share, and financial statements.  Management will explain what happened during the year, and what they expect for the year to come.  You will gain a lot of knowledge about a company reading its annual report.  You can access most annual reports through a company’s website. Don’t print the annual report from the website.  It’s too long.  If you want a copy, the company will send you one at no charge.  Send them an email directly from their website. Or, download them onto your computer from the company's website.

SEC Reports –
You can access the SEC through Edgarscan.  It will take you to the 10K (annual) reports and the 10Q (quarterly) reports, as well as any other filings the company might make.  These reports are similar to the annual report, but companies are not allowed to provide flowery presentations.  These reports are actually much more direct.  The Business Section covers the company’s activities, risks and competitors, as well as managements assessment of it’s future.  This is the real meat—a must read when doing research.

Free Online Research Websites
Let’s look at competitors: First read the companies 10K Business Section. After that:

§         Hoover’s at 

§         Reuters at

§         Yahoo at



For ratios, current prices, and other numbers:

§         #1 site is Reuters at

§         Yahoo at page.

§         MSN at

§         411 Stocks at, click on Stocks, enter ticker.

For Earnings estimates 3-5 years away:
The Value Line report will be the best source, but it’s only one analyst’s opinion. After that:

§         Reuters at

§         Manifest Investing at if you are a subscriber.  They also have the industry's estimated growth rates.

Free Online Magazines:
Enter your ticker symbol into the website’s Search Box, and see if there are any recent articles on the company.  Do the same with the name of the company’s president.

§         Money Magazine, also at

§         Smart Money Magazine, also at

§         Fortune Magazine, also at

§         Forbes Magazine, also at

§         Worth Magazine, also at

§         Kiplinger’s Personal Finance Magazine, also at

Free Online Conference Call with the Company:
At the end of every quarter, the company must make a progress report to the SEC, its shareholders, the media and Wall Street.  Many of these conference calls (20-45 minutes) are now online.  You can check the company’s website for a link in their Investor Relations section, or go to at to listen to a replay. You can also find most company transcripts at Seeking Alpha

Using the company’s products…or visiting the company’s stores:
I think this one is a gimme!


More investment ideas are available at the Crow River Investment Club Website